IT Industry News – January 2020

Five years ago, in January 2015, the biggest deal saw Yahoo looking like it might be remaking itself, spinning off its $40 billion stake in Alibaba to become smaller, leaner and either buy or be bought! Other M&A activity involving a "B" was Telco equipment company Commscope offering $3 billion for TE Connectivity’s network business. There were also a number of very well-known companies out buying, and in no particular order: Amazon paid something like $300 million (approximate) for chip designer Annapurna Labs; Expedia bought its online travel competitor Travelocity for $200 million; Samsung paid $100 million for Brazil’s largest print company Simpress; Google paid about $100 million for mobile payments company Softcard; Facebook bought Wit.ai a company that has a Siri like solution that can be embedded in other products; Dropbox bought CloudOn a document editing and productivity tools company; Twitter paid somewhere between $30 million and $40 million for Zipdial, an Indian company that does some funky marketing thing with phone hang ups; and finally, Microsoft made two acquisitions: startup text analytics company Equivo and, in a departure from its history, it bought open software company Revolution Analytics.

January 2019 was another fairly busy M&A month. The biggest deal saw DXC pay $2 billion for digital consultancy Luxoft; DXC also bought another European services company EG A/S. Amazon Web Services made a couple of acquisitions: Israeli data migration company CloudEndure and Vancouver startup TSO Logic, a cloud migration company. Accenture was another high-profile company making multiple acquisitions in January: Houston-based consulting company Enaxis Consulting, and Orbium, a company providing services in the banking sector. Dropbox splashed $230 million to buy electronic signature company HelloSign; Google bought DORA, a research firm; Microsoft bought database startup Citus; AT Kearney bought consulting company Cervello; and Zix paid $275 million for email security company AppRiver.

VMWare was also in the news for confirming its annual "workforce rebalancing" initiative which may involve hundreds of layoffs. Gartner tells us that 2020 IT spending is likely to increase by a healthy 3.4%. The world’s CEOs are a little concerned about a potential slowdown or even recession in 2020. The World Economic Forum announced the "Reskilling Revolution" with a plan to reskill a billion people around the globe by 2030.

In economic and employment news, both the EU and the OECD had positive employment numbers which were reflected in most of the stats from around the world. The US added 202,000 non-farm jobs in November which was the largest gain since last April. Even where the reports were less than positive, the underlying message was that the economy is doing OK.

General Interest

Research firm Gartner said global IT spending is expected to reach $3.865 billion in 2020, up a healthy 3.4 percent over the $3.737 billion spent in 2019, when spending grew a mere 0.5 percent.

The world’s chief executives cite the risk of a recession as their biggest external concern in 2020 for the second consecutive year, while attracting and retaining talent ranks as their top internal concern, according to a survey released by The Conference Board.

More than half, or 53%, of chief executives across the world expect a slowdown in global economic growth this year, according to data from an annual survey by PwC.

The World Economic Forum announced the "Reskilling Revolution" initiative, which is aimed at reskilling a billion people around the globe by 2030. Companies taking part include The Adecco Group, ManpowerGroup, Infosys, LinkedIn, Coursera Inc. and Salesforce. It comes as 75 million jobs are expected to be displaced by automation and technological integration in the coming years.

Global Job Markets

The economy — Canada

The Canadian Staffing Index reflects the volume of labour supplied by staffing companies to their clients in Canada, based on hours worked. In the last 12 months, the highest reading has been 120, and the lowest reading 89. The December reading of 99 reflected reduced hours worked because of how statutory holidays fell during the month and is still significantly higher than last December’s reading of 90.

The number of jobs in Canada rose by 46,200 in December from November, according to the ADP Canada National Employment Report. Trade/transportation and utilities added 8,200 jobs, but manufacturing shed 1,400 positions and finance/real estate had 4,500 fewer jobs.

Employment in Canada rose by 0.2% month-over-month, or 35,200 jobs, in December for total employment of approximately 19.1 million, according to seasonally adjusted numbers released Statistics Canada. Gains were concentrated in the private sector, which added 56,900 jobs. That gain was offset by a loss of 21,500 jobs in the public sector. In addition, the number of self-employed workers fell by some 200 people.

The economy — USA

Nonmanufacturing business activity in the US expanded in December at a faster rate than in November, according to the Institute for Supply Management’s nonmanufacturing purchasing managers index. The index rose to a reading of 55.0% in December from 53.9% in November. The December reading was the highest since August. Readings above 50% indicate expansion.

The Institute for Supply Management’s Purchasing Managers Index for December fell to its lowest reading since June 2009. The PMI fell to a level of 47.2%, down from 48.1% in November. In comparison, the June 2009 reading was 46.3%. December also marked the fifth consecutive month the index showed contraction, and the rate of contraction in December was greater than that in November.

Optimism about the job market boosted consumer confidence in January, according to The Conference Board. Its US Consumer Confidence Index released today rose to a level of 131.6 in January from 128.2 in December.

The economy is looking a bit brighter and finding unskilled labour has become tougher, according to the National Association for Business Economics’ Business Conditions Survey. Reports of unskilled labour shortages jumped to 18% of respondents in today’s report from 11% in October’s report. Although, reports of skilled labor shortages remained unchanged at 43%. "Respondents to the January 2020 NABE Business Conditions Survey are more bullish about economic growth over the coming 12 months than they were in October," said NABE President Constance Hunter.

The Conference Board’s Leading Economic Index for the US edged down 0.3% in December to a reading of 111.2. The index has declined in four out of five of the last months. "However, financial conditions and consumers’ outlook for the economy remain positive, which should support growth of about 2% through early 2020," he said.

The number of job openings in the US fell by 561,000 in November; it was the biggest decrease since August 2015, according to seasonally adjusted data from the US Bureau of Labor Statistics.

While the US economy expanded modestly in the final six weeks of 2019, labour markets remained tight with labor shortages constraining growth in some areas, according to the Federal Reserve Beige Book report.

US real gross domestic product grew at an annual rate of 2.1% in the fourth quarter, according to the "advance" estimate of GDP growth by the Bureau of Economic Analysis. Real GDP also increased 2.1% in the third quarter, but the drivers differed. Today’s fourth-quarter GDP estimate was in line with the consensus forecast and just below The Conference Board’s forecast of 2.2%.

IT employment in the US fell year-over-year in December, according to the TechServe Alliance, a trade association of the IT and engineering staffing solutions industry. And fears are 2020 won’t see significant growth in IT jobs. The US will likely fall well short of meeting demand for IT workers from US businesses given the increasingly restrictive immigration policies and an insufficient supply of domestic talent.

Separately, the TechServe Alliance also reported engineering employment rose by 0.07% on a month-over-month basis in December to nearly 2.7 million jobs. The increase was 1.63% on a year-over-year basis.

The Conference Board’s Employment Trends Index fell in December, but still indicates a labor market expansion. Overall, the index has been on a flat trend since the summer of 2018 and consistent with ongoing labor market expansion.

The US added 202,000 nonfarm, private-sector jobs in December from November, according the ADP National Employment Report. This is the largest gain since April 2019, which saw a gain of 255,000 jobs. The gain exceeded forecasts from economists surveyed by Econoday who expected a gain of 157,000, MarketWatch reported.

The economy — Outside North America

The International Monetary Fund sees the world economy accelerating to 3.3% in this year from 2.9% last year. However, the report also cautioned the global economy faces risks such as a re-escalation of trade tensions, and many countries aren’t benefiting from the upswing in growth.

The unemployment rate in the 28-country European Union in November remained at its lowest level since tracking began in January 2000, according seasonally adjusted data from Eurostat. November’s unemployment rate was 6.3%, holding steady from October.

The unemployment rate for countries within the Organisation for Economic Co-operation and Development remained stable at 5.1% in November 2019 when compared to the previous month. Across the OECD area, 33 million people were unemployed.

Almost half a billion people are working fewer paid hours than they would like or lack adequate access to paid work, according to a new International Labour Organisation report. The report also showed that unemployment is projected to increase by around 2.5 million in 2020.

Employers’ confidence in the UK economy rose 2% in the fourth quarter when compared to the previous rolling quarter. At the same time, their confidence in making hiring and investment decisions also improved, rising by 4%, according to the latest JobsOutlook report from the Recruitment and Employment Confederation.

The number of jobs available in London decreased by 42% in the fourth quarter of 2019 when compared to a year ago, according to the London Employment Monitor report by recruitment firm Morgan McKinley. At the same time there was a 31% decrease in professionals seeking jobs.

Salaries in the UK’s technology industry surged in 2019 with a 13.8% hike in jobs posted and a 4.7% increase in the average salary, according to a report from Reed Specialist Recruitment. Reed’s report, which analysed 7.5 million jobs posted since the start of 2016, showed the new data protection rules and the rising threat of cyber crime in particular has seen demand for some roles soar, which is pushing up salaries.

The number of people employed in Germany in 2019 was the highest since the German reunification in 1991, according to Germany’s Federal Statistical Office. However, the rate of employment growth slowed in the past year. The increase in 2019 represented an additional 402,000 people in employment to a total of 45.3 million people in employment during the year.

The seasonally adjusted unemployment rate in Australia stood at 5.1% in December 2019, an increase of 0.1% when compared to the same period last year, according to data from the Australian Bureau of Statistics.

Science, technology, engineering, mathematics -related job roles in India have risen by 44% between November 2016 and November 2019, reports Business Today, citing data from Indeed. The data also showed a 5% improvement for STEM-related job roles during the period between November 2018 to November 2019.

Private sector firms in India are likely to create 700,000 jobs in 2020 amid bullish hiring sentiment and optimistic hiring plans, according to an Employment Trend Survey published by MyHiringClub & Sarkari-Naukri.

The increase in employment rate of Singapore citizens over the last decade (from 60.0% in June 2009 to 63.6% in June 2019) was driven most consistently by those aged 65 & over, according to data from the Ministry of Manpower. This increase in the employment rate reflected efforts to raise the employability of older workers. Meanwhile, the Singapore citizen unemployment rate (seasonally adjusted) has been broadly stable, averaging 3.1% from 2010 to 2019 (June periods).

The majority, or 68%, of Singapore business leaders think technology will create more permanent jobs on their teams throughout 2020, according to research from Robert Half International Inc.

The jobless rate in Malaysia fell to 3.2% in November 2019 from 3.3% in November 2018, according to Statistics Malaysia. Data also showed that the number of unemployed persons in November 2019 stood at 513,900, down 0.4% against November 2018.

13.5 million new urban jobs were created in China last year, higher than the target of 11 million. The registered urban unemployment rate stood at 3.62% at the end of 2019, well below the government’s annual target of 4.5%.

The unemployment rate in the Philippines stood at 5.1% in 2019, down from 5.3% in 2018, according to the Philippines Statistics Authority’s preliminary results of its annual labour and employment estimates for 2019.

Company News

VMware has confirmed that a "limited number" of employees are being laid off this week as part of the virtualization star’s annual "workforce rebalancing." Sources told CRN the layoffs included several hundred employees on a global basis. VMware employs roughly 24,000 people although the company has gone on an acquisition tear over the past 12 months.

Insight Partners, a New York investment firm paid $5 billion for Veeam, a Switzerland-based cloud data management company. According to Craft.co, Veeam generated 963 million in 2018, a 17 per cent increase year-over-year. It had 330,000 customers at the end of 2018, but Veeam now quotes that to be 365,000. Veeam’s cloud data management is its central business. The Veeam Backup & Replication solution provides data redundancy for VMware and Microsoft Hyper-V virtual machines.

Private equity giant Insight Partners has agreed to purchase fast-growing IoT security startup Armis to strengthen its market position in unmanaged device security. The largest IoT security acquisition in history values Palo Alto, Calif.-based Armis at $1.1 billion and includes a $100 million investment from Google-backed venture capital fund CapitalG. Armis will continue to operate independently and will be managed by its existing executive team, including Co-Founder and CEO Yevgeny Dibrov as well as Co-Founder and CTO Nadir Izrael.

Data center colocation giant Digital Realty sold 10 of its Powered Base Building data centers for $557 million with the goal of using the money to accelerate growth in other areas, potentially helping to fund its upcoming blockbuster $8.4 billion purchase of Interxion. The San Francisco-based data center provider sold the data centers located in North America to Singapore-based real-estate development and investment firm Mapletree.

VMware is acquiring network analytics specialist Nyansa to boost its flagship SD-WAN by VeloCloud platform through new artificial intelligence and machine learning capabilities. Nyansa analyzes user network traffic from more than 20 million client devices across thousands of customer sites at companies including Tesla, Uber, Lululemon, Rooms To Go, GE Healthcare, SF International Airport, Stanford and the Northeast Georgia Healthcare System, to name a few.

Xerox has acquired SMB-focused solution provider Arena Group. Uxbridge, U.K.-based Arena Group is one of the "leading providers of office technology, software, and services solutions in the U.K.," Xerox said in a press release. With the deal, Xerox is hoping to move deeper into European markets, the company said. The acquisition received approval from government regulators. The Arena Group — a Microsoft gold certified partner — was founded in 1991 and has grown from 10 employees in one office, to about 160 people across six U.K. offices, the company said on its website.

Digital workflow technology provider ServiceNow has agreed to acquire Loom Systems as a way to extend its artificial intelligence for IT operations, or AIOps, capabilities. While ServiceNow already has an AIOps offering, Loom Systems brings advanced capabilities around log data that will enhance ServiceNow’s platform.

Demand from ServiceNow customers to reach an ever-growing global audience is what drove the IT automation provider to enter an agreement to buy Passage AI, a company that specializes in its software’s ability to learn languages. The Mountain View, Calif.–based conversational AI platform company was founded in 2016 by CEO Ravi N. Raj, and chief technology officers Madhu Mathihalli and Mitul Tiwari.

AlayaCare recently acquired Procura, a division of Complia Health and a global provider of enterprise software for long-term and post-acute care firms. Founded in 2014, AlayaCare provides technology solutions to the industry to simplify the full care continuum for home and community care firms in Canada, Australia and the United States. Founded in 1989, Procura has operations in Canada and Australia and serves nearly 200 organizations.

Equinix is set to acquire bare metal automation startup Packet in a move to create a new offering that allows businesses to rapidly deploy digital infrastructure while also bolstering the data center colocation giant’s edge computing capabilities.

Synopsys has purchased emerging vendor Tinfoil Security to better integrate dynamic application security testing into development and DevOps workflows. The Irvine, Calif.-based software giant said the acquisition of Mountain View, Calif.-based Tinfoil Security will address an emerging need in the market around Application Program Interface (API) scanning technology and further differentiate the Synopsys portfolio.

One of the fastest growing solution providers in the world, Park Place Technologies, is continuing its M&A charge in 2020 with the purchase of the network operations center (NOC) business of IntelliNet with the strategy to expand its offerings outside of the third-party hardware maintenance space.

Effectual, a fast-rising Amazon Web Services partner formed by the brain trust behind former managed services giant Datapipe, has completed its first acquisition — one that positions it to become a major player in the public sector. The Hoboken, N.J.-based managed and professional services startup bought JHC Technology, a specialist in offering managed Amazon cloud services to government agencies, that’s based outside Washington D.C. in National Harbor, Md.

Cloudflare has purchased early stage browser isolation vendor S2 Systems to keep security threats away from devices and make every day web browsing safer and faster. The San Francisco-based security and performance services vendor said Kirkland, Wash.-based S2’s browser isolation technology executes browser code on cloud servers rather than on a user’s device. As a result, Cloudflare said security threats will be kept away from the user’s device and only rendering instructions will be sent to the viewer’s browser.

Fast-growing channel powerhouse Ahead, which recently merged with fellow channel star Data Blue, has purchased its third solution provider over the past six months by acquiring Platform Consulting Group in a move to boost its cloud-native application capabilities and Dell Technologies expertise.

Mimecast has purchased early stage cybersecurity startup Segasec to help customers better defend against attacks that leverage fake websites and domains for credential harvesting. The Lexington, Mass.-based email security vendor said its acquisition of Tel Aviv, Israel-based Segasec will extend protection beyond the perimeter to safeguard against brand exploits used to steal money and data. Mimecast said Segasec’s technology is engineered to actively monitor, manage, block and take down phishing scams or impersonation attempts on the web.